Slovak Fin min forecasters see faster growth on booming car sector

The country of 5.4 million is home to three car plants and is expecting a fourth to come online in 2018 after the government signed a deal with Jaguar Land Rover (JLR) last year for a 1.4 billion euro ($1.6 billion) factory.Reuters | September 06, 2016, 18:41 IST

BRATISLAVA: Slovakia's economy is likely to grow faster than the 3.2 percent expected this year, fuelled by big investments in the automotive sector and highway construction, the finance ministry's Institute for Financial Policy (IFP) said on Tuesday.

The euro zone member's economy expanded by 0.9 percent quarter-on-quarter in the second quarter, accelerating from the previous three-month period, data showed on Tuesday confirming a preliminary estimate.

The result was three times higher than that of euro zone as a whole, confirming the healthy state of the Slovak economy which has benefited from fiscal control that has kept public finance deficit within acceptable limits and is expected to reach a surplus by 2019.

On a year-on-year basis, Slovak output grew by 3.7 percent in the April-June period, the statistics office said, with the main drivers being exports and household spending.

The country of 5.4 million is home to three car plants and is expecting a fourth to come online in 2018 after the government signed a deal with Jaguar Land Rover (JLR) last year for a 1.4 billion euro ($1.6 billion) factory.

Construction of the JLR factory, starting next week, and construction of two highways in the capital Bratislava by Spanish infrastructure group Ferrovial's Cintra unit will boost Slovakia's economy this year.

France's car maker Peugeot Citroen and Germany's Volkswagen have also announced investments in their Slovak factories and South Korean Kia expects a record output this year.

Britain's perceived slow progress towards exit from the European Union following its June "Leave" vote is also seen as another positive factor for Slovak growth, the IFP said.

The ministry said in July the impact of Brexit would shave 0.1-0.2 percentage points off Slovakia's growth expected to reach 3.2 percent this year and up to 0.3 percent of an expected 3.7 percent expansion in 2017.